Regional economic integration is being increasingly seen as a principal stimulus to growth, peace, and sustainable development in the new world economy. In South Asia, the formation of the South Asian Association for Regional Cooperation (SAARC) in 1985 was envisaged as a path-breaking effort to transcend political divergences and realize the collective economic potential of one of the most densely populated regions of the world. Yet, in spite of shared common culture, shared historical relationships, and massive demographic presence, SAARC's economic integration process is slow and incomplete. This paper critically analyzes the prospects and residual problems of regional economic cooperation in SAARC. It chronicles the institutional path of programs like SAPTA, SAFTA, and SDF, assesses the economic situation and asymmetries of member states, and identifies structural bottlenecks - from political ill wills and non-tariff barriers to institutional failings and weak connectivity. Making comparative inferences from ASEAN and the EU, the paper maintains that to mature into a sustainable economic block, SAARC must unpoliticize trade efforts, invest in border infrastructure, regulate regulatory standards, and firm its institutional base. The conclusion optimistically assumes regionalism in South Asia, despite being late in coming, is not a cause lost - provided a changeover towards pragmatic, incremental, and trust-based cooperation is attempted.